Tuesday, June 21, 2011

Time Dotcom - Til today they can't get their heads straight

Most investors would remember that Time Dotcom was rescued by the then, Telecommunications Minister Lim Keng Yaik. LKY was probably forced to not provide a 3G license to Digi (when it is the one who can do something with it), but yet gave the license to Time (the one with financial trouble) - forced Digi who had no choice but to lease the license from Time and voila, Time's big hole was patched allowing it with a positive cash position today. Not bad for the rejuvenation of a Malaysian company without doing anything strategic. (If you notice, Time owns some Digi shares which they listed as investments in the books. FYI, they have sold a large chunk for the cash they have as at todate)

But yet Time's predicament which is not having a strong business (yes they continue to have the fibre from the North-South Highway) persisted until few years ago. Until they found Afzal (a guy who has ideas worth some millions but not the hundreds of millions he has now!). Afzal owns AIMS with several connected partners probably had it tough to grow the business until that big break. I cannot comprehend the valuation of a group of companies which in their mind is valued at RM334 million by CIMB assisting. Tell me how are we supposed to value some small data centers which they put little money to start with and later tell Time Dotcom shareholders it is now worth more than RM330 million? No profit guarantee but some wishy-washy profit forecasts.

And 2 days ago, what makes me sick is that Time Engineering (another listed entity who owns around 24% of Time Dotcom), puts up their holding of Time Dotcom for sale at RM0.53 per share. Can someone tell me why then Time Dotcom is valued at RM0.80 per share during the proposed sale of the shares? No analysts dare to make any comments on this?

Does this mean that Time Engineering does not believe that the share is worth RM0.80 as in the market price (before the announcements) or could again something is done behind the scene?

I suspect that someone is using this opportunity to wipe the overhang shares from the market at a below market price.

Serious Investing!

Friday, June 17, 2011

Muhibbah - Are they telling the truth?

Today Muhibbah took a 1 hour trading halt to announce their position with regards to the receivership in the Asia Petroleum hub ("APH") case. The fact of the matter is that their stocks took such a beating that it forced them to announce the matter a day late rather than allowing a Singaporean press to announce it and let the market making presumption on the rumour.

The announcement in Bursa at 10.30 am today.
The Company is one of the contractors in respect of the Project known as Procurement, Construction and Commissioning of a Petroleum Hub and Bunkering Facility at the Reclaimed Island Off Tanjung Bin, Johor (APH Project). The receivables for certified work done and related costs amount to RM 370.8 million as at 31 Dec 2010.

With reference to the articles in the Singapore Business Times on 15 June 2011 regarding the appointment by CIMB (the financier of APH project) of receivers and managers for APH, the Company wishes to inform that according to APH, they have identified an investor, and are in negotiations with the investor to fully finance the completion of the APH Project, including making due payments to contractors.

As this is a oil and gas project with a secured business and the said investor due to finalise its financing transaction with APH, there are reasonable grounds to hold that the receivables are recoverable in due course.

Anything wrong with this announcement?
  1. They are making assumption that they will recover fully under this receivership case within 24 hours after the project was in receivership. How do they know so soon I wonder or are they just assuming?;
  2. I am questioning their project risk management handling. How can this construction company which is one of the more established in Malaysia, be allowing APH to owe them more than RM370 million? Where is the risk management especially when this issue was already in the news for more than 3 years;
  3. One question I am asking is (high chance that they are a non-secured creditor), they are that confident they can fully recover the receivables - I say that the white knight if there is any, will not want them to take the haircut? As a potential new owner, I will even want CIMB (the bank that calls for the receivership) to take the haircut;
  4. If there is a white knight, why take so long for the white knight to appear? - the white knight must be waiting for the receiver to take action first, then ask for haircut.
I say that there is a high chance that Muhibbah is forced to write off most of the receivables - and they are not going to do it soon - at the expense of shareholders again.

Monday, June 13, 2011

How is Maybank or CIMB going to pay off RHBCAP's shareholders?

While I am in the camp that do not agree to either Maybank or CIMB acquiring RHB, as the purchase does not makes sense for either of the acquirer, it is probably going to happen anyway.

Can someone let me know where is the synergy, if the 2 largest Malaysian banks is (fight it out) to acquire a bank which is a result of a merger among DCB Bank, Kwong Yik and UMBC. Does Malaysia need such a large bank?

Anyway, as I do not hold any CIMB or Maybank shares, I just would like to ask 1 question - how will RHBCap shareholders be paid (since I have my money in EPF)? I do not want the shares of Maybank or CIMB please, as EPF already holds substantial stake in the 2 banks.

What I want is cash and see that EPF makes good use of the cash. Based on the latest market valuation of RHBCap, EPF's holding of RHB is valued at somewhere in between RM9.5 to RM10 billion.

Now the question is where is CIMB or Maybank going to find the RM21 billion or more to pay for the RHBCap stake in cash? My guess is that it is going to end up being a share swap deal and we holders of money in EPF will end up with more stakes in the 2 largest banks in Malaysia.

I am pro the selling of RHB to a foreign party but I know that is not going to happen.

Serious Investing!